Investor Appetite Soars as Nigeria’s February Bond Auction Records 92% Bid-to-Cover Ratio
Nigeria’s February bond auction drew robust investor interest, as the Debt Management Office (DMO) issued N800 billion in Federal Government bonds. Total subscriptions reached N739 billion, up from N715 billion in January, lifting the bid-to-cover ratio to 0.92 times compared with 0.79 times previously. Despite strong demand, the DMO allotted N524.3 billion to investors, reflecting careful market calibration.
The domestic bond market closed the month on a bullish note, with average yields dropping sharply by 570 basis points to 15.54 per cent. Analysts said this decline reflects heightened investor confidence and sustained demand for government securities, particularly longer-dated instruments offering more attractive returns amid expectations of potential interest rate moderation over the medium term.
Institutional investors, including pension funds and asset managers, were major contributors to the surge in demand. Their preference for longer-tenor bonds supported price gains in the secondary market and drove yields lower. Specific instruments, such as the 10-year bond due February 2034, attracted N972.9 billion in subscriptions at a 15.5 per cent marginal rate, while the nine-year bond due May 2033 recorded N879.69 billion in bids.
The positive sentiment extended to Nigeria’s Eurobond market, where improved investor confidence in emerging market debt helped push average yields down by 1.27 percentage points to 6.98 per cent. Market operators highlighted that sustained international interest and optimism about Nigeria’s external debt outlook contributed to stronger buying in the global market despite tight domestic liquidity.
Mike Ezeh, Managing Director of Crane Securities Limited, noted that investors are increasingly seeking instruments that offer both competitive returns and principal security. “Traditional money market instruments are losing appeal due to frequent interest rate adjustments,” he said. “The strong participation in bonds shows a shift toward fixed-income securities that provide predictable yields amid rising market volatility.”
source: The guardian